NEW ORLEANS (AP) _ The federal government's third annual ``State of Cities'' report says smaller American communities are not sharing in the economic boom enjoyed by mega-cities like New York and Los Angeles.

Smaller and medium-sized cities are experiencing slower population growth, higher unemployment and growing poverty compared to larger communities, said Andrew Cuomo, secretary of the Department of Housing and Urban Development.

``A prosperity gap still divides the majority of communities that are doing well from the minority that are struggling,'' Cuomo said.

The report was issued here in advance of the 67th annual Conference of Mayors. President Clinton was addressing the meeting via videotape today. Cuomo will address the convention Saturday.

The report said that small cities and older, established suburbs right outside the cities' borders, have problems in crime and poverty and shouldn't allow jurisdictional boundaries hinder efforts to find regional solutions.

In the months before the report was finalized, Cuomo traveled to Gary, Ind., Appalachian towns in eastern Kentucky and other smaller communities to talk with local leaders and see why they were failing to share in the economic prosperity enjoyed by large communities.

For example, in Gary, 40 percent of residents fall below the federal poverty rate of $16,655 in annual income for a family of four.

``Our challenge now is to invest in building a brighter future for people and places left behind,'' Cuomo said.